Revision 13-4; Effective December 1, 2013

 

HHSC averages monthly income that is predictable but varies in amount from month to month. Types of monthly income that require averaging include, but are not limited to, earned income, royalty income and interest income.

Variable income can be from one source or a combination of sources.

For eligibility budgets, treatment of variable income is the same for all cases. Treatment of variable income in co-payment budgets differs from the eligibility budgets and applies only to community-based waiver and institutional cases.

There are additional treatments for variable income for the co-payment budgets that include reconciliation and restitution.

The examples in this section are for demonstration purposes only. They may not reflect the current spousal allowance amounts.

 

H-3100 When to Project

Revision 09-4; Effective December 1, 2009

 

 

H-3110 Variable Income

Revision 09-4; Effective December 1, 2009

 

  1. The person has income that fluctuates from month to month (such as earnings, royalties, dividends, interest, rents, etc.) and the average from all sources is $5 or more.
  2. Variable income from any combination of sources was received during at least three of the preceding six months, is anticipated to reoccur, and the average from all sources is $5 or more.

    Example: The applicant entered the nursing facility (NF) in January and applied for MEPD the same month. During the six months preceding the month the case is worked (February), the person received the following variable income payments, all of which are anticipated to reoccur during the projection period (March through August).
     
    Month Source #1 Source #2 Payment Rec.
    Aug.      
    Sept. $20   X
    Oct.      
    Nov.   $20 X
    Dec.      
    Jan.      

    Since the person did not receive variable income from all sources during at least three of the preceding six months, do not average and project variable income, even though these payments are anticipated to reoccur with the same frequency during the coming six months.

    Note: If an eligibility budget is being calculated for the prior month of November, the $20 payment received that month is excluded as infrequent/irregular income in the eligibility budget. There is no co-payment for November, since the person did not enter the NF until January.
  3. In spousal impoverishment cases, the community-based spouse received variable income from any combination of sources during at least three of the preceding six months, the variable income is anticipated to reoccur, and the monthly average from all sources is $5 or more.

    Example: The applicant entered the NF in January and applied for Medicaid the same month. The person has no variable income. However, the community-based spouse receives monthly royalty payments from a mineral lease. During the six months preceding the month the case is worked (February), the community-based spouse received monthly royalties as follows: August = $25; September = $30; October = $20; November = $15; December = $22; and January = $25.

    Since the community-based spouse received variable income during at least three of the preceding six months, all payments are anticipated to reoccur during the coming six months, and the average from all sources is $5 or more ($25 + $30 + $20 + $15 + $22 + $25 = $137 ÷ 6 months = $22.83 monthly average). The eligibility specialist projects the $22.83 average as the community-based spouse's income in the co-payment calculation.
  4. For applications, variable income which is anticipated to reoccur is calculated into the co-payment budget for the month of certification and is projected over the next six months. If eligibility is being tested for prior months, the amount of variable income actually received during a given month is budgeted as income for that month.
  5. For ongoing cases, variable income (earned or unearned) is not calculated into the co-payment budget until the month following the month in which the person received his first variable payment.

    Example (Reviews Only): The person's first monthly variable payment (such as earned income or interest) is received in October. This payment is calculated into the co-payment budget in November to be effective December.

 

H-3120 Incurred Medical Expenses (IMEs)

Revision 09-4; Effective December 1, 2009

 

  1. IMEs fluctuate from month to month, or they remain constant and are paid on a monthly basis and are anticipated to continue during the coming six-month period.

    Example: A redetermination is performed in February, and the person is making monthly payments for dentures purchased six months ago. During the preceding six months (August through January), the person paid $30 a month for dentures, and these payments are anticipated to continue during the projection period (March through August). The average of IMEs paid from August through January, or $30, is projected in the co-payment budget from March through August.
  2. The person pays IMEs that are regular and fixed and paid on a quarterly, semi-annual or annual basis. These IMEs are converted to a monthly amount and projected over a 12-month period.
  3. IMEs that have not been paid in preceding months are anticipated to occur in subsequent months.

    Examples:
    • A relative has been paying the person's insurance premium, but the person will begin paying it in March. The IME is calculated into the co-payment budget in February to be effective March.
    • The person will pay for dental work in monthly installments. Both the dental work and the payments begin in March. The monthly payment is calculated into the co-payment budget in February to be effective March.

 

H-3200 When Not to Project

Revision 10-1; Effective March 1, 2010

 

 

H-3210 Variable Income

Revision 10-1; Effective March 1, 2010

 

  1. Variable income is received from all sources in fewer than three of the preceding six months and is not anticipated to increase in frequency. Variable income which is not projected is restituted at the annual redetermination if the amount in the month of receipt is $5 or more.

    Example: The applicant entered the nursing facility (NF) in January and applied for Medicaid in the same month. During the six months preceding the month the case is worked (February), the applicant received the following variable payments, which are anticipated to reoccur during the projection period (March through August).
     
    Month Source #1 Source #2 Payment Rec.
    Aug.      
    Sept. $20   X
    Oct.      
    Nov.   $20 X
    Dec.      
    Jan.      

    Since the person did not receive variable income from all sources during at least three of the preceding six months, do not average and project variable income, even though these payments are anticipated to reoccur with the same frequency during the coming six months.

    Note: If an eligibility budget is being calculated for the prior month of November, the $20 payment received that month is excluded as infrequent/irregular income in the eligibility budget. There is no co-payment for November, since the person did not enter the NF until January.

 

  1. Variable income is received during three of the preceding six months from any combination of sources, but payment from at least one of the sources is not anticipated to reoccur during the next six months, and payments from remaining sources were not received during three of the preceding six months.

    Examples:
    • The applicant entered an NF in January and applied for Medicaid the same month. During the six months preceding the month the case is worked (February), the applicant received the following unearned variable payments, but the payment from Source #3 was a one-time payment and is not anticipated to continue.
       
      Month Source #1 Source #2 Source #3 Payment Rec.
      Payment Rec.
      Aug. $30     X
      Sept.        
      Oct.   $30   X
      Nov.        
      Dec.        
      Jan.     $50 X

 

  • Although the person received variable income from all sources during three of the preceding six months, the payment from Source #3 is not anticipated to reoccur. Therefore, the variable payments from Sources #1 and #2 are not averaged and projected for future months.

Note: If eligibility is being determined for the prior month of October, the unearned variable income of $30 received during that month is not countable income, as the amount is less than the infrequent or irregular exclusion of the first $60 unearned in a calendar quarter. (See Section E-9000, Infrequent or Irregular Income.) There is no applied income for October since the person did not enter the NF until January.

  • The applicant entered the NF in January and applied for Medicaid the same month. During the six months preceding the month in which the case is worked (February), the person received the following variable payments, but the payment from Source #3, received in October, was a one-time payment and is not anticipated to recur.
     
    Month Source #1 Source #2 Source #3 Payment Rec.
    Aug. $20     X
    Sept.   $20   X
    Oct.     $20 X
    Nov.        
    Dec. $20 $20   X
    Jan.        

 

  • Since the person received variable income from Sources #1 and #2 during three of the preceding six months, the income from Sources #1 and #2 is averaged and projected into the applied income budget for the coming six months (March through August). However, since the one-time $20 payment from Source #3 is not anticipated to recur, it is not included in the average of variable income to be projected.
  1. Variable income from all sources was received during three of the preceding six months and is anticipated to recur, but the average of income from all sources is less than $5.

    Example: The applicant entered the NF in January and applied for Medicaid the same month. During the six-month period preceding the month in which the case is worked (February), the person received the following variable payments, all of which are anticipated to recur.
     
    Month Source Payment Rec.
    Aug. $2 X
    Sept. $1 X
    Oct. $2 X
    Nov. $5 X
    Dec. $3 X
    Jan. $4 X

    The person received variable payments from all sources during each of the six preceding month; however, since the average of all payment is less than $5 ($2 + $1 + $2 + $5 + $3 + $4 = $17 ÷ 6 months = $2.83) and is not anticipated to increase, that average is not projected into the applied income budget.

 

H-3220 Incurred Medical Expenses (IMEs)

Revision 09-4; Effective December 1, 2009

 

  1. Medical services were received prior to the medical effective date (MED).

    Example: The person entered the nursing facility (NF) on Jan. 10, applied for Medicaid the same month, and meets all eligibility criteria as of Jan. 10. She underwent routine dental treatment during the preceding October, for which she will be making monthly payments of $30 for 12 months. Since the treatment occurred prior to the medical effective date, no deduction for IMEs is allowed.
  2. Someone other than the person (or community-based spouse to whom income is being diverted in the co-payment calculation) is paying the IME.

    Example: A NF person has an assignable general health insurance policy. The premiums are $50 a month and are paid by the person's son. The son states that he will continue to make these premium payments for the person. Since the person is not paying the premiums, they are not deductible as an IME.

 

H-3230 Both Variable Income and Incurred Medical Expenses (IME)

Revision 09-4; Effective December 1, 2009

 

Co-payment is $0 and is not anticipated to change. In this situation, semi-annual reviews of variable income/IMEs are not required, and variable income/IMEs may be re-budgeted on an annual basis.

 

H-3300 How to Budget at Application

Revision 09-4; Effective December 1, 2009

 

 

H-3310 Variable Income

Revision 09-4; Effective December 1, 2009

 

If the applicant routinely receives variable income that is anticipated to continue, use an average of variable income received during the six months preceding the application file date, or the six months preceding any month up to the certification month, and project that average for the coming six-month period. Schedule a special review for the sixth month after the case is certified to rebudget co-payment.

Examples:

  • The person applied in January and is being certified in February. The eligibility specialist verifies that the person received variable income totaling $300 from August through January, which is anticipated to reoccur, and obtains an average of $50 per month ($300 ÷ 6 months). This average ($50) is budgeted as variable income in the co-payment calculation. A special review is scheduled for the following August, six months from the certification date.
  • The person applied in January and is being certified in March. The eligibility specialist has the option of averaging variable income for any one of the following six-month periods:
    • July through December (six months prior to January, the month in which the application was filed);
    • August through January (six months preceding February, which is a month prior to the March certification month); or
    • September through February (six months prior to the certification month of March).

If variable income is received on a monthly basis and is anticipated to continue, the amount to be projected is an average of variable income received during preceding months. If variable income was received during all six of the preceding months, divide the total received by 6; if there are only five months of variable income, divide the total by 5; if there are only four months of variable income, divide the total by 4; and so on.

Examples:

  • The application was filed in January and is being certified in February. The person began receiving monthly variable income six months ago, in August. Variable income received from July through December totaled $400. The average to be projected over the coming six months is $66.67 ($400 total ÷ 6 months = $66.67). A special review is scheduled for the following August to rebudget variable income.
  • The application was filed in January and is being certified in February. The person began receiving monthly variable income two months ago, in December. Variable income received for December and January totals $75. The average to be projected over the coming six months is $37.50 ($75 total ÷ 2 months = $37.50). A special review is scheduled for the following August to re-budget variable income.

In spousal impoverishment cases, if the community spouse has variable income that is anticipated to continue, in the co-payment budget use an average of variable income received during the six months preceding the application file date, or the six months preceding any month up to the certification month, and project that average for the coming six-month period. Schedule a special review for the sixth month after the case is certified to rebudget co-payment.

Note: If co-payment is $0 and there is a wide margin of variability for variable income, semi-annual reviews are not required. Variable income should be re-budgeted at each annual redetermination.

Note: Cases with significant month-to-month differences in income amounts should be reviewed quarterly rather than every six months. This quarterly averaging will minimize the impact on a person if he receives income in very low amounts for several months. If the monthly average of variable income from all sources is less than $5, the variable income need not be budgeted for co-payment purposes.

If variable income from all sources was received during at least three of the preceding six months and is anticipated to reoccur, total the variable income received during the preceding six months and divide by six to determine the initial budget. Schedule a special review for the sixth month after the case is worked to rebudget co-payment.

Example: The application is worked in February. The preceding six months are August through January. Variable income totaling $65 from two different sources was received in August, October, December and January and is anticipated to continue. The average to be projected (from March through August) is $10.83 ($65 ÷ 6 months = $10.83).

Spend Down Situations — Amounts of variable income received during preceding months may differ from amounts anticipated for future months. In these situations, obtain a statement of anticipated income amounts from the source, if possible. If the source cannot provide a statement, expected income must be determined based on other information.

Examples:

  • Interest Income — The applicant entered the nursing facility in September, and her Medicaid application is being worked in February. She owns an interest-bearing bank account, but has been spending down resources since September. The current bank account balance is sufficient to continue generating interest. The eligibility specialist budgets the anticipated interest amount based on the best estimate available, considering the reduced account balance and current interest rates, rather than averaging the interest posted during preceding months when the account balance was much higher. A special review is scheduled for no later than August to reconcile.
  • Rental Income — The amount of rental income to be projected is a net amount based on gross rents anticipated to be received, less allowable expenses anticipated to be paid, during the six months following the month the case is worked (the month the case is certified).

 

H-3320 Incurred Medical Expenses (IMEs)

Revision 09-4; Effective December 1, 2009

 

  1. If IMEs are paid on a monthly basis and are anticipated to continue, the amount to be projected is an average of expenses paid in preceding months. If expenses were paid during all six of the preceding months, divide the total by 6; if there are only five months of expenses, divide the total by 5; if there are only four months of expenses, divide the total by 4; and so on.

    Examples:
    • The application was filed in January and is being certified in February. Beginning the preceding August, the person began paying a monthly premium of $50 on an assignable general health insurance policy. The average IME to be projected over the coming six months is $50. This is calculated as follows: $300 total paid ÷ 6 months = $50 average. A special review is scheduled for the following August.
    • The application was filed in January and is being certified in February. Two months ago, in December, the person began paying a monthly premium of $60 on an assignable general health insurance policy. The average IME to be projected over the coming six months is $60. This is calculated as follows: $120 total paid ÷ 2 months = $60 average. A special review is scheduled for the following August.
  2. Regular and fixed IMEs which are paid on a quarterly, semi-annual or annual basis are converted to a monthly average and projected for a 12-month period. If these are the person's only recurring IMEs, the case should be monitored at regular intervals (for example, every six months for quarterly and semi-annual payments) to ensure that payments continue, but reconciliation of projected expenses is not required unless the expense is not paid or the amount paid is different from the amount projected.

    Examples:
    • The person entered the nursing facility (NF) in January and the application is being certified in February. She pays quarterly premiums of $150 on an assignable general health insurance policy. This quarterly premium is converted to a monthly amount, and $50 ($150 quarterly premium ÷ 3 months = $50) is budgeted as a monthly IME. A special review is scheduled for the following August to ensure that payments continue. However, reconciliation will not be required in August, unless payment of premiums was discontinued or the premium amount changed.

      Note: Reconciliation of fixed IMEs is not required if the amount paid overall is correct, even though the schedule of payments may have been interrupted.
    • The person pays a monthly premium of $50 on an assignable general health insurance policy. At the semi-annual review performed in April, the eligibility specialist verifies that in December the person made no premium payment, but made a double payment ($100) in January. Since the overall payment is still $50 per month, reconciliation is not performed for either December or January.
  3. For fixed IMEs paid on a monthly basis, the amount to be projected is based on anticipated amounts for the coming six-month period.

    Examples:
    • If the person has been paying a monthly health insurance premium but says he is dropping the policy, do not project the expense in the budget. (The premium expense should be allowed through the month of the last payment.)
    • The person entered the NF in January, and the case is being certified in February. She has been paying monthly premiums of $25 on an assignable general health insurance policy. However, there is verification that these premiums will increase to $35 effective April 1. The eligibility specialist budgets $25 as an IME, and schedules a special review for March to re-budget co-payment based on the new premium amount. At the special review in March, the eligibility specialist budgets an IME deduction of $35 to be effective April.
  4. IMEs are projected for no more than six months.

    Exception: If the person's only IME is a fixed amount and there is no variable income, the IME may be projected for a 12-month period. The case is monitored at regular intervals (such as every six months for monthly, quarterly and semi-annual payments) to ensure that payments continue, but reconciliation is not required unless payments were not made or the amount paid is different from the amount projected.

 

H-3330 Both Variable Income and Incurred Medical Expenses (IME)

Revision 09-4; Effective December 1, 2009

 

  1. Variable income/IMEs to be projected for future months (not to exceed six) are based on income received/expenses paid in months preceding the month in which the application is worked.
  2. If variable income was received during three of the preceding six months and is anticipated to reoccur, or if variable income will be received monthly, the amount to be projected for the coming six months is an average of variable income received during preceding months. (If variable income was received in all six of the preceding months, divide the total by 6; if there are only five months of variable income, divide the total by 5; if there are only four months of variable income, divide the total by 4; and so on.)

    If IMEs are paid monthly and are anticipated to reoccur, or if they are in a fixed amount and are paid on a quarterly, semi-annual or annual basis, the amount to be projected for the coming six months is a monthly average of IMEs paid during preceding months.

    Examples:
    • The application was filed in January and is being certified in February. The person receives monthly royalties from a mineral lease, which totaled $230 during the preceding six months (August through January). The person also pays a quarterly premium of $150 on an assignable general health insurance policy. There are no other IMEs.

      The amount of variable income to be projected over the coming six months is $38.33. This is calculated as follows: $230 total ÷ 6 months = $38.33 average.

      The amount of IMEs to be projected over the coming six months is $50. This is calculated as follows: $150 quarterly premium ÷ 3 months = $50 average.
    • The application was filed in January and is being certified in February. During the preceding six months, the person received the following variable income payments, each of which is anticipated to reoccur:
       
      Month Source #1 Source #2 Source #3
      Sept. $75    
      Nov.   $50  
      Jan.     $60

      The person also pays a quarterly premium of $120 on an assignable general health insurance policy. There are no other IMEs.

      The amount of variable income to be projected over the coming six months is $30.83. This is calculated as follows: $75 + $50 + $60 = $185 total ÷ 6 months = $30.83 average.

      The amount of IMEs to be projected over the coming six months is $40. This is calculated as follows: $120 quarterly premium ÷ 3 months = $40 average.

      A special review is scheduled for the following August to re-budget variable income and IMEs.

 

H-3400 How to Budget at Reviews

Revision 09-4; Effective December 1, 2009

 

 

H-3410 Variable Income

Revision 09-4; Effective December 1, 2009

 

When projecting variable income, it is permissible to overlap months (or to skip a month), if verification is unavailable.

Examples:

The case is reviewed in February and verification of variable income for January is unavailable. The options are:

  • Average variable income from July through December (total divided by six months), and project that average through the following August. (This is true even though variable income received in July was used in the average calculated at the preceding semi-annual review in August [when the income from the preceding February through July was averaged].) Also at this February semi-annual review, reconcile the months of August through December. (Do not reconcile for July, since that month was reconciled at the previous semi-annual review last August. Never reconcile the same month twice!)
  • Average variable income from August through December (total divided by five months), and project that average through the following August. Reconcile for August through December.

Options at the next annual review (the following August) are:

  • Average variable income received from January through July (total divided by seven months), and project that average through the following February. Reconcile for January through July.
  • Skip January altogether, and average February through July (total divided by six months), and project that average through the following February. Reconcile for January through July.
  • If verification of variable income received in July is unavailable, average variable income received from February through June (total divided by five months), or variable income received from January through June (total divided by six months), and project that average through the following February.

 

H-3420 Incurred Medical Expenses (IMEs)

Revision 09-4; Effective December 1, 2009

 

  1. IMEs which have been projected in the co-payment budget must be re-budgeted at least every six months.

    Exception: If the person's only IME is a fixed amount and there is no variable income, the IME may be projected for a 12-month period. The case is monitored at regular intervals (such as every six months for monthly, quarterly and semi-annual payments) to ensure that payments continue, but reconciliation is not required unless payments were not made or the amount paid is different from the amount projected.
  2. IMEs which have not been paid in preceding months, but which are anticipated to occur in subsequent months, may be projected. This will afford the person sufficient income to pay the expense.

    Examples:
    • A relative has been paying the person's insurance premium, but the person will begin paying it in March. The IME is calculated into the co-payment budget in February to be effective March.
    • The person will pay for dental work in monthly installments. Both the dental work and the payments begin in March. The monthly payment is calculated into the co-payment budget in February to be effective March.
  3. For fixed IMEs paid on a monthly basis, the amount to be projected is based on anticipated amounts for the coming six-month period.

    Example: The case is being worked in October, and the person has been making monthly premium payments of $25, which are not anticipated to change. During the preceding six months (April through September), no payment was made in May, but a double payment ($50) was made in June. The amount projected (from November through April) is $25 ($150 total payments ÷ 6 months = $25 average).
  4. If an IME is expected to cease, such as payments on a dental bill will be completed, schedule a special review to delete the IME from the budget effective the month payment is to cease.

 

H-3430 Both Variable Income and Incurred Medical Expenses (IME)

Revision 13-4; Effective December 1, 2013

 

  1. Variable income/IMEs which have been projected in the co-payment budget must be re-budgeted at least every six months.

    Exception: If the co-payment is $0 and is not expected to change, a 12-month average may be used, and semiannual reviews are not required.
  2. If it is discovered after the case is worked that the person receives variable income or pays IMEs, or if variable income/IMEs begin on an active case, base the projected amount on income received/expenses paid in the preceding six-month period, or however many months during the preceding six-month period in which payments/expenses occurred, or the amount expected to be received/paid. The average of the preceding months may be used to project the budget.

Examples:

  • An annual review was completed in January. Monthly variable income payments totaling $300 were received during the preceding six months (July through December). The projected variable income amount was $50 ($300 total ÷ 6 months = $50 average). A semiannual review was scheduled for the following July. In April, the eligibility specialist is notified that the person will begin making monthly payments of $50 for dentures. These payments begin in May and are to continue for 48 months. The $50 monthly IME (the amount expected to be paid) is calculated into the co-payment budget in April to be effective in May.

    At the semiannual review in July, the eligibility specialist verifies that the $50 monthly payments for dentures continue, and he averages variable income received from January through June.
  • An intermediate care facility for individuals with an intellectual disability or related conditions (ICF/IID) application was certified in January, at which time a monthly premium of $60 on an assignable general health insurance policy was projected as an IME. A semiannual review was scheduled for the following July. In April, the eligibility specialist is notified that the person began participating in a sheltered workshop in March and was paid $25 that month. This $25 variable income payment is calculated into the co-payment budget in April to be effective in May.

    At the semiannual review the following July, the eligibility specialist verifies that the person continues to pay the $60 monthly health insurance premium. The eligibility specialist verifies that variable income received from March through June totals $110. The IME amount to be projected for the coming six months continues to be $60. The variable income amount to be projected for the coming six months is $27.50 ($110 total ÷ 4 months = $27.50 average). The annual review is scheduled for the following January.
  • An application was certified in January. There were no variable income or IMEs, and the annual review is due the following January. In March, the eligibility specialist is notified that in February the person began renting out her home for $200 per month. There have been no repair/upkeep expenses, and real property taxes are not due until December. However, annual real property insurance totaling $200 will be paid in June.

    The eligibility specialist opts to synchronize the semiannual variable income reviews with the annual review cycle, so a semiannual review is scheduled for July (six months from the January certification). The amount of variable income to be projected through July is $150. This is calculated as follows: $200 annual real property insurance ÷ 4 months (the projection period – April through July) = $50 monthly average; $200 gross monthly rents − $50 allowable deductions = $150 net monthly rents).

    In May, the eligibility specialist is notified that in April the person began paying a quarterly premium of $150 on an assignable general health insurance policy. The eligibility specialist calculates $50 ($150 quarterly premium ÷ 3 months = $50 average) as an IME into the co-payment budget in May to be effective in June.

    At the July semiannual review, the eligibility specialist verifies that the person continues to pay the $150 quarterly ($50 monthly average) health insurance premium. The eligibility specialist also projects rental income through the following January, deducting the real property taxes due in December from gross rents anticipated to be received.

 

  1. Verification of amounts of variable income/IMEs should be for recent months before the month the case is worked. If verification is not available for the month immediately preceding the month in which the case is being worked and there is no anticipated change (such as variable income/IMEs will not terminate nor will the amounts significantly change), do not delay case action pending receipt of verification for the immediate preceding month.

    Example: The case is being reviewed in February, and the preceding six months are August through January. IMEs are a fixed amount and have not changed. Verification of variable income received in January is unavailable. Take an average of the variable income received from July through December (six months), or from August through December (five months), and project that average through August.
  2. Temporary fluctuations in the amounts of variable income received/IMEs paid, such as up to two consecutive months in which no variable income was received or IMEs were paid, do not disrupt the six-month review cycle. Variable income/IMEs that cease for three or more consecutive months and that are not anticipated to resume should be deleted from the budget.
  3. If receipt of variable income/payment of IMEs resumes after having been deleted from the budget, the new projected amount is based on the amount of variable income/IMEs expected to be received/paid. Historical data may be used for the projection.
  4. The eligibility specialist may elect to synchronize or not to synchronize semiannual reviews of variable income/IMEs with the annual review cycle. If the specialist chooses to synchronize, more frequent reviews than every six months may be required.

Example: The specialist is working in a 10-month review cycle and chooses to synchronize variable income/IME reviews with annual reviews. Variable income reviews would be conducted every five months.

 

H-3500 When to Reconcile

Revision 09-4; Effective December 1, 2009

 

 

H-3510 Variable Income

Revision 09-4; Effective December 1, 2009

 

Retroactive reconciliation is not required for stable variable income with narrow fluctuations. The eligibility specialist will average the variable income received during the preceding six months. If average variable income exceeds $4.99 per month, this average is projected for the following six months. This process is repeated every six months.

Unstable variable income or variable income with wide fluctuations must still be retroactively reconciled.

Notes:

  • Retroactive reconciliation is always required if requested by the authorized representative.
  • Reconciliation performed is for the entire reconciliation period (the block of time considered for reconciliation), and not month-by-month. If the variable income adjustment is a positive number (the person underpaid co-payment), add the adjustment to the co-payment for the most recent month in the reconciliation period.

    Example: If reconciling the period of October through March, the most recent month in the reconciliation period is March. Form H1259, Correction of Applied Income, is sent to the person and nursing facility, and after 12 days the co-payment is adjusted in SAS in the most recent month. There is no month-by-month adjustment in the reconciliation period (October-March) in SAS for this underpayment. Form H1201-A, Client Declaration or Streamline Review Worksheet, Page 2, may be utilized to assist in calculating the correct reconciliation period and the most recent month in the reconciliation period.

 

H-3520 Incurred Medical Expenses (IMEs)

Revision 09-4; Effective December 1, 2009

 

When IMEs have been projected in the co-payment budget, review the case at least every six months and reconcile the budget according to the monthly IMEs actually paid. If the projected average monthly IMEs and the actual average monthly IMEs are each less than $2, or the difference between the two is less than $1, then reconciliation is not required. (Although reconciliation is optional for these small amounts, reconcile whenever the person requests it.)

Note: Reconciliation performed is for the entire reconciliation period (the block of time considered for reconciliation), and not month-by-month. If the variable income adjustment is a positive number (the person underpaid co-payment), add the adjustment to the co-payment for the most recent month in the reconciliation period.

Example: If reconciling the period of October through March, the most recent month in the reconciliation period is March. Form H1259, Correction of Applied Income, is sent to the person and nursing facility, and after 12 days the co-payment is adjusted in SAS in the most recent month. There is no month-by-month adjustment in the reconciliation period (October-March) in SAS for this underpayment. Form H1201-A, Client Declaration or Streamline Review Worksheet, Page 2, may be utilized to assist in calculating the correct reconciliation period and the most recent month in the reconciliation period.

 

H-3600 When Not to Reconcile

Revision 09-4; Effective December 1, 2009

 

 

H-3610 Variable Income

Revision 09-4; Effective December 1, 2009

 

  1. The average monthly variable income adjustment for the reconciliation period is less than $5.
  2. Variable income is stable with minor fluctuations.

    Example: The review is completed in February, with the preceding six months being August through January. Actual variable income for the period totaled $100; projected variable income for the period totaled $75. Calculation: $100 Total Actual − $75 Total Projected = +$25 Income Adjustment. Divide the income adjustment by the number of months (+$25 ÷ 6 = +$4.17). The +$4.17 monthly average is less than +$5, so reconciliation is not required. Do not reconcile if the monthly average is less than +$5.

 

H-3620 Incurred Medical Expenses (IMEs)

Revision 09-4; Effective December 1, 2009

 

  1. If the person's only IME is a fixed amount, there is no variable income, and the IME has been projected for a 12-month period. The case is monitored at regular intervals (such as every six months for monthly, quarterly and semi-annual payments) to ensure that payments continue, but reconciliation is not required unless the payments are no longer made or the amount paid is different from the amount projected.
  2. If a missed monthly IME payment was made up by a double payment in a subsequent month, do not reconcile for the missed payment.

 

H-3630 Both Variable Income and Incurred Medical Expenses (IME)

Revision 09-4; Effective December 1, 2009

 

If co-payment is $0 and reconciliation would not change the co-payment amount, do not reconcile.

 

H-3700 How to Reconcile

Revision 09-4; Effective December 1, 2009

 

 

H-3710 Variable Income

Revision 12-1; Effective March 1, 2012

 

  • To obtain the variable income adjustment, subtract the total projected income from the total actual income.

    Note: Make adjustments in the Service Authorization System Online (SASO).

    Example: The review is completed in February with the preceding six months being August through January. Actual variable income for this period totaled $200; projected variable income for the period totaled $75. Calculation: $200 − $75 = +$125. $125 ÷ 6 = +$20.83 per month (reconcile since monthly average is over $5).

    If the variable income adjustment is a positive number (for example, the person underpaid co-payment), add the adjustment to the co-payment for the most recent month in the reconciliation period.

    Examples:
    • If reconciling the period of October through March, the most recent month in the reconciliation period is March. Form H1259, Correction of Applied Income, is sent to the person and nursing facility, and after 12 days the co-payment is adjusted in SAS in the most recent month. There is no month-by-month adjustment in the reconciliation period (October-March) in SAS for this underpayment. Form H1202-A, MAO Worksheet-Income Changes, Page 2, may be used to assist in calculating the correct reconciliation period and the most recent month in the reconciliation period.
    • Same situation as the first example above. Co-payment for the most recent month in the reconciliation period (January) was $230. Add the variable income adjustment (+$125) to the co-payment for January. Calculation: $230 co-payment for January + $125 variable income adjustment = $355 reconciled co-payment for January.
  • If the variable income adjustment is a negative number (for example, the person overpaid co-payment), subtract it from the co-payment for the most recent month in the reconciliation period. If the co-payment for the most recent month in the reconciliation period is insufficient to absorb the adjustment, subtract the excess negative adjustment from the next-to-most-recent month in the reconciliation period.

    Example: The review is completed in February, with the preceding six months being August through January. Actual variable income for this period totaled $100; projected variable income for this period totaled $150. Calculation: $100 actual − $150 projected = –$50 variable income adjustment. Co-payment for the most recent month in the reconciliation period (January) was $25. Co-payment for the next-to-most-recent month in the reconciliation period (December) was also $25. Reconciliation for January: $25 co-payment − $50 variable income adjustment = $0 (or –$25 rollback). Thus, reconciled co-payment for January is $0.

    Reconciliation for December: $25 co-payment − $25 rollback = $0 reconciled co-payment.
  • If co-payment must be increased or decreased because of income averaging, use Form H1259 to correct retroactive periods. Notify the person about the correction to co-payment. Send copies of the notice and Form H1259 to the nursing facility. For ongoing adjustments, process through the automated system.

 

H-3720 Incurred Medical Expenses (IMEs)

Revision 09-4; Effective December 1, 2009

 

To obtain the IME adjustment, subtract total actual expenses from total projected expenses.

Example: A review is completed in February, with the reconciliation period being August through January. Actual IMEs for the reconciliation period totaled $90; projected IMEs totaled $60. Calculation: $60 total projected − $90 total actual = –$30 IME adjustment. Reconcile as it is to the person's advantage.

 

H-3730 Both Variable Income and IMEs

Revision 09-4; Effective December 1, 2009

 

  1. At each review of variable income/IMEs (at least every six months), determine the total actual amount of variable income received/IMEs paid during the reconciliation period (the block of months being considered for reconciliation).
  2. Total the amount of variable income/IMEs that were projected during the reconciliation period (the same block of months considered for reconciliation in the paragraph above).

    Note: Use reconciliation worksheet to complete your calculations.
  3. If the IME adjustment is a negative number, subtract it from the variable income adjustment. The difference is the overall adjustment.

    Examples:
     
    • A review is completed in October, with the reconciliation period being April through September. Actual variable income totaled $150, and actual IMEs totaled $90. Projected variable income totaled $160, and projected IMEs totaled $60.
      • Calculation of income adjustment $150 actual − $160 projected = –$10 income adjustment.
      • Calculation of IME adjustment $60 projected &minus $90 actual = –$30 IME adjustment.
      • Overall adjustment –$10 income adjustment + –$30 IME adjustment = –$40 overall adjustment.
    • A review is completed in October, with the reconciliation period being April through September. Actual variable income for this period totaled $160; actual IMEs totaled $60. Projected variable income totaled $150; projected IMEs totaled $50. Monthly co-payment for the reconciliation period was $150.
      • Calculation for variable income $160 actual &minus $150 projected = +$10 variable income adjustment.
      • Calculation for IMEs $50 projected &minus $60 actual = –$10 IME adjustment.
      • Overall adjustment +$10 variable income adjustment + –$10 IME adjustment = $0 overall adjustment.

    There is no adjustment to the co-payment for the most recent month in the reconciliation period (September).
  4. If the IME adjustment is a positive number, add it to the variable income adjustment. The difference is the overall adjustment.

    Examples:

    Same as second example above, except that actual income totaled $170 and actual IMEs totaled $90. Projected income totaled $160, and projected IMEs totaled $150.
     
    • Calculation of variable income $170 actual − $160 projected = +$10 income adjustment.
    • Calculation of IMEs $150 projected − $90 actual = +$60 IME adjustment.
    • Overall adjustment +$10 income adjustment + $60 IME adjustment = +$70 overall adjustment. Since the overall adjustment exceeds the monthly threshold of +$5 (+$70 ÷ 6 months = +$11.67 > + $5 monthly threshold), reconcile the entire overall adjustment.
  5. If the overall adjustment for the reconciliation period is a positive number, this means the person underpaid co-payment. If the overall adjustment is +$30 or more (+$30 ÷ 6 months = +$5 per month), reconcile the overall adjustment. If the overall adjustment is +$29.99 or less (+$29.99 ÷ 6 months = +$4.99 or less), do not reconcile.

    Examples:
    • A review is performed in October, with the period considered for reconciliation being April through September. The variable income adjustment is +$10; the IME adjustment is +$10. Thus, the overall adjustment is +$20 (+$10 variable income adjustment + $10 IME adjustment = +$20). Since the overall adjustment is less than +$30 (+$20 ÷ 6 months = +$3.33 < $5 threshold), do not reconcile.
    • Same situation as above, except that the variable income adjustment is +$15; the IME adjustment is +$15. Thus, the overall adjustment is = +$30 (+$15 variable income adjustment + $15 IME adjustment = +$30). Since the overall adjustment is equal to the +$5 monthly threshold (+$30 overall adjustment ÷ 6 months = +$5), reconcile for the most recent month in the reconciliation period (September). Co-payment for September was $240.

      Reconciliation for September: $240 co-payment + $30 overall adjustment = $270 reconciled co-payment.
    • The case is worked in October, and verification of variable income for September is unavailable. The eligibility specialist averages variable income from March through August (total divided by six months), and projects that average through the following April. He reconciles for the months of April through August (five months). (He does not reconcile for March, since that month was reconciled at the previous semi-annual review the preceding April. Never reconcile for the same month twice!)

      The variable income adjustment is +$60; the IME adjustment is –$30. Thus, the overall adjustment is +$30 (+$60 variable income adjustment − $30 IME adjustment = +$30). Since the overall adjustment exceeds the monthly threshold $30 ÷ 5 months = $6 > + $5 threshold), reconcile for the most recent month in the reconciliation period (August). Co-payment for August was $300.

      Reconciliation for August: $300 co-payment + $30 overall adjustment = $330 reconciled co-payment.
  6. If the overall adjustment for the reconciliation period is a negative number, this means the person overpaid co-payment. For overpaid co-payment in any amount, reconcile using Form H1259. Do not perform a month-by-month reconciliation. Rather, subtract the overall adjustment from co-payment for the most recent month in the reconciliation period.

    Example: The case is worked in October. At the previous semi-annual review the preceding April, variable income for March was unavailable, so the eligibility specialist averaged variable income received from September through February, and projected that average through this review month (October). At this review (in October), the eligibility specialist reconciles for the months of March through September (seven months). (He does not reconcile for February, since that month was reconciled at the previous semi-annual review the preceding April. Never reconcile for the same month twice!) Co-payment from March through September was $200.

    The variable income adjustment is –$10, and the IME adjustment is –$10. Thus, the overall adjustment, is –$20 (–$10 variable income adjustment, –$10 IME adjustment). Since the overall adjustment is a negative number, it must be subtracted from co-payment for the most recent month in the reconciliation period (September).

    Reconciliation for September: $200 co-payment − $20 overall adjustment = $180 reconciled co-payment.
  7. If the negative overall adjustment exceeds co-payment for the most recent month in the reconciliation period, roll the excess negative adjustment back and subtract the excess amount from the co-payment for the next-to-most-recent month in the reconciliation period.

    Example: A review is performed in October, with the period considered for reconciliation being April through September. Monthly co-payment for the reconciliation period was $45. The variable income adjustment is –$30; the IME adjustment is –$20. Thus, the overall adjustment is –$50 (–$30 variable income adjustment + –$20 IME adjustment = –$50).

    Reconciliation for September: $45 co-payment − $50 overall adjustment = $0 (or –$5 rollback). Reconciled co-payment for September is $0.

    Reconciliation for August: $45 co-payment − $5 rollback = $40 reconciled co-payment for August.
  8. Never reconcile for the same calendar month twice, even at different reviews. While it is permissible to overlap months in averaging and projecting variable income, it is not permissible to overlap months for reconciliation purposes.

    Example: A review is performed in October, with the period considered for reconciliation being April through September. Verification of variable income received in September is not available, so the eligibility specialist averages variable income from March through August and projects that average through the following April. (This is true even though at the previous six-month review the preceding April, variable income for March was part of the average for October through the March, which was projected through this review month (October). At this review, the eligibility specialist reconciles for the months of April through August. The month of March was reconciled at the previous review the preceding April.

 

H-3800 How to Reconcile Co-Payment in ICF/ID Cases with Earned Income

Revision 12-1; Effective March 1, 2012

 

Step 1

Determine the total actual and projected co-payment amounts for the reconciliation period.

Actual Co-payment — For each month in the reconciliation period, calculate the actual co-payment (co-payment based on actual variable income received and incurred medical expenses (IMEs) paid). Calculate the personal needs allowance (PNA)/protected earned income (PEI) allowance based on actual earnings received. Total the actual co-payment for the reconciliation period.

Note: For fixed income, do not include an increase that is subject to restitution policy rather than reconciliation policy.

Projected Co-payment — Total co-payment amounts for each month in the reconciliation period.

Example: A review is completed on an ICF-ID case in January, with the preceding six months being July through December.

Actual Co-payment (AI)

 

Month Fixed Earned Other IMEs PNA/PEI App. Inc.
July $250 $60 $0 $0 $105.00 $205.00

August

$250 $75 $0 $0 $112.50 $212.50

September

$250 $85 $0 $0 $117.50 $217.50

October

$250 $78 $0 $0 $114.00 $214.00

November

$250 $65 $0 $0 $107.50 $207.50

December

$250 $80 $0 $0 $115.00 $215.00

Total

          $1,271.50


Projected AI

Month From Co-pay Screen

July

$275

August

$275

September

$275

October

$275

November

$275

December

$275

Total

$1,650

 

Step 2

Determine the co-payment adjustment by subtracting total projected co-payment for the reconciliation period from the total actual co-payment for the reconciliation period. The result is the co-payment adjustment.

A. Total Actual Co-payment (from Step 1)

$1,271.50

B. Total Projected Co-payment (from Step 1)

– $1,650.00

C. Total Co-payment Adjustment

– $378.50

D. Number of Months in Reconciliation Period

÷ 6

E. Average Monthly Adjustment

– $63.08

If the average monthly adjustment is +$4.99 or less, stop. Do not reconcile.

If the average monthly adjustment is +$5 or more, proceed to Step 3.

If the average monthly adjustment is a negative (–) figure in any amount, proceed to Step 3.

Step 3

Reconcile co-payment for the most recent month in the reconciliation period.

If the total co-payment adjustment (from Step 2C) is a positive (+) number, add it to the co-payment for the most recent month in the reconciliation period. The result is the co-payment adjustment.

If the total co-payment adjustment (from Step 2C) is a negative (–) number, subtract it from the co-payment for the most recent month in the reconciliation period. The result is reconciled co-payment.

A. Co-payment Month: December

$275.00

B. Total co-payment adjustment (from Step 2C)

– $378.50

C. Reconciled co-payment

$–103.50

D. If A.-B. is less than $0, enter the negative (–) amount here

( – $103.50)
Excess Negative Adjustment

If there is an "excess negative adjustment" from Step 3D, proceed to Step 4.

Step 4

If there is an "excessive negative adjustment" (from Step 3D), subtract the excess amount from the co-payment for the next-to-most-recent month in the reconciliation period.